Below is a short article by Tom Brennan taken from CNBC, a good reminder in knowing how you really want to go about your investment and the importance of sticking to your goal and set plan.

Enjoy!

***

“Not all Wall Street gibberish is deceptively complicated,” Cramer said Monday. “Some of it is deceptively simple.”

Case in point: The idea of investing versus trading.

A lot of people use the terms interchangeably, but they shouldn’t. At least on Mad Money, they carry very different meanings. An investment is based on a long-term thesis, while a trade is any stock purchase made to profit from a short-term catalyst. Mixing up the two can cause some serious damage to your portfolio.

Only buy a stock as a trade when you know there’s some future event that could drive its stock price higher. Maybe, if we’re talking about a pharmaceutical company or a biotech, it’s the release of positive clinical trial data. Whatever the catalyst, though, the strategy is to game that news and, hopefully, take profits after. But even if the plan doesn’t pan out and you lose money, Cramer said, you must take profits once the catalyst has past. The biggest mistake you can make is to turn a trade into an investment.

On the investing side, you might see some short-term declines, but that’s OK. The goal here is to bank profits over the longer term. So those dips are just a chance to buy more of the stock in question, provided you still believe in the thesis that brought you to it in the first place. And if the stock should rise in price, don’t take your money and run. Should your thesis hold true, there will be still more good news ahead for the company.

Cramer made this last mistake himself with Apple back when it was trading at $26. The share price jumped $5 and he took profits. Yup, at $31 he cashed out. His price target for Apple now, in a world where apparently everyone wants an iPhone and iPad? $300.***Have fun investing (if you’re set for investing)!

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Hi, I'm Omeng Tawid, and welcome to this blog - Smart Pinoy Investor.

If you’re new to
personal finance and investing, you’ll want to know that this blog is
written to help you achieve your financial goals. You can can start on this page, orcontact me via email if you have specific questions. Enjoy learning & earning!Omeng Tawid |

If you’re new to
personal finance and investing, you’ll want to know that this blog is
written to help you achieve your financial goals. You can can start on this page, orcontact me via email if you have specific questions. Enjoy learning & earning!Omeng Tawid |

Disclaimer: The information contained in this site are not intended as financial advice. Readers should be aware that investments in securities, such as stocks or other financial instruments, involve risks. Loss of capital is a possibility. Past performance is not indicative of future returns. Please consider your investor profile as you decide on the fund to invest in.